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      • Analysis: Chad's sudden wealth brings concerns

Analysis: Chad's sudden wealth brings concerns

WASHINGTON -- Convincing the rulers of Chad to follow through on their earnest pledges to make wise use of the petrodollars that are beginning to roll in from the recently completed oil pipeline into Cameroon has now taken on new urgency.

 

The conflict in neighboring Sudan and the still-rickety Chad legal system have the authors of a study released Thursday on the $4 billion project worried that the pipeline will not become the blessing that the population of the poor African nation desperately needs.

 

"This project is hanging by a thread," said Ian Gary, an adviser for Catholic Relief Services and a co-author of the report along with the non-profit Bank Information Center.

 

"Chad remains unprepared for the complexities of an economy increasingly dominated by oil," Gary added.

 

The Chad-Cameroon pipeline has been closely watched by human-rights activists and international financial institutions as a test case of sorts for a new awareness of the dizzying revenues from oil and other "extractive" industries in resource-rich Africa.

 

The steady flow of millions of dollars into some of the most poverty-stricken nations in the world would appear to be heaven sent; however, the human-rights community has become more and more convinced that the opposite is true and that revenues wind up instead entrenching self-serving and brutal dictatorships.

 

In order to secure financing for the project from the World Bank, Chad agreed to levels of financial transparency aimed at ensuring that the bank, as well as human-rights groups and western governments, would be able to monitor the cash flow and make sure that the proceeds from the project would be used to help everyone in Chad and not merely the ruling elite.

 

Gary and co-author Nikki Reisch of the Bank Information Center told United Press International on a conference call Thursday that while the steps toward transparency had been taken during the initial financing process, the internal changes within Chad had been moving at a slower pace, leaving an uncomfortable amount of wiggle room for a government that could not necessarily be trusted to do the right thing, especially with the pipeline providing an estimated $200 million in royalties from Chad oil fields in the coming year.

 

"Chad is a landlocked country with a long history of civil war, continued political instability, a weak judicial system, widespread corruption and an all-encompassing institutional capacity problem," the report stated. "This is an extremely challenging environment in which to attempt to turn oil revenues into benefits for the poor."

 

"And the stakes are high," it added. "If Chad's oil money is mismanaged, it could mean increased hardships and conflict for the nearly 7 million people in Chad living on less than $1 per day."

 

The presence of an unhappy population -- combined with increasingly well-to-do ruling elites -- is a common ingredient for unrest not only in Africa but elsewhere in the world. The result is often times ruthless crackdowns and persecution by the government, which critics of the extractive industries argue is directly financed by royalties paid by western companies that rightfully should be used to benefit the entire population.

 

In the case of Chad the authors warned that the stakes were even higher due to the current upheaval in Sudan's Darfur region that has created a refugee crisis along the border with Chad and has to date left an estimated 70,000 people dead.

 

While Chad's President Idriss Deby has publicly called for an end to the violence, the report's authors told reporters that they had heard talk from western diplomats and other African sources that Deby's supporters had been privately criticizing him for not providing support for the rebel faction.

 

Again, the report found no evidence of Chad's petrodollars finding their way to the Sudanese combatants, although the alleged lack of financial transparency in Chad opened a door for oil money to help finance and thus continue the ghastly conflict.

 

"The effect of the Darfur refugee crisis on Chad has been profound," Gary noted. "Not only has this put a serious strain on Chadian resources, but it has also added a layer of political stress to the environment in Chad."

 

In short, the royalties paid by western oil companies would be used to pay for continuing misery rather than benefiting the poor people of Chad.

 

The authors remained circumspect of the slow pace of structural reforms in Chad that are needed to create the kinds of transparency that would help keep the lid on graft and corruption and also urged the United States and the World Bank to act as a stern taskmaster and to urge Deby's administration to not drag its feet.

 

Time, they said, was of the essence because once the oil royalties begin flowing on a regular basis, Chad's rulers will not feel the need to appease the international community that until now has had the leverage of providing the financing for the pipeline.

 

"The window for reform is rapidly closing," said Reisch. "The international donors have to use what leverage they have left today ... rather than depending on incremental policy steps."

 

Should the momentum for reform in Chad stall, the pipeline to Cameroon will not be the panacea for change it could be but instead could become an unhappy guarantee of more of the same misery for many years to come.

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